Sunday, 16 December, 2018

Non-OPEC Oil Output Soars Despite Price Slide

Traders work on the floor at the New York Stock Exchangein New York City US Nov. 12 2018. Brendan McDermid Reuters Traders work on the floor at the New York Stock Exchangein New York City US Nov. 12 2018. Brendan McDermid Reuters
Nellie Chapman | 14 November, 2018, 13:52

He said there was now an oversupply of oil, leading to plummeting prices, and that the kingdom would curb its output to stabilize the market.

Crude oil production outside the Organization of Petroleum Exporting Countries is set for further-and more intensive-growth this year and next, according to the latest monthly report of the cartel.

"OPEC lowered its demand forecast, and that gives them cover for cutting production", said Phil Flynn, analyst at Price Futures Group in Chicago.

Crude extended an earlier decline after the release of the OPEC report, trading as low as $66.65 a barrel, the lowest since March. OPEC warned demand for its crude is falling faster than expected, underlining why Saudi Arabia and some other members are signaling output cuts.

Both crude benchmarks have fallen more than 20% since peaking at four-year highs in early October.

The U.S. dollar also put pressure on oil, hovering near 16-month highs and so making oil more expensive for importers using other currencies.

Riyadh indicated on Monday it was on course to ignore the USA president's wishes at OPEC's next meeting due in December because it saw a need to reduce OPEC output by a collective one million barrels per day during 2019.

Saudi Energy Minister Khalid al-Falih said on Monday that Opec agreed there was a need to cut oil supply next year by around one million barrels per day from October levels to prevent oversupply.

Oil prices were hit on Monday after US President Donald Trump put pressure on OPEC not to cut supply to prop up the market.

Even as the Saudis floated the possibility of a cut in production, the selling has not abated.

Extraction from American shale fields has propelled USA oil production to record highs this year with crude output now at 11.6 million bpd, helping make the United States self-sufficient in energy. Russian Federation has given mixed signals about a cut, with Lukoil chief executive Vagit Alekperov saying on Monday that he did not see cuts being necessary.

USA futures closed down 7.1 per cent for a record 12th straight decline and the lowest since November 2017. "These unusual bedfellows no longer seem like they're in the same bed anymore".

This took prices up on Monday but not significantly so.

Oil is back in headlines.

Oil markets slipped again on Wednesday, extending losses from a 7 per cent plunge the previous session as surging supply and the spectre of faltering demand scared off investors.